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FDI: Nigeria's Telecoms See Revenue Rise, Investment Fall by $353.1 Million in 2022

FDI: Nigeria’s Telecoms See Revenue Rise, Investment Fall by $353.1 Million in 2022

…Mobile Market Booms

Nigeria’s telecommunications industry presented a contrasting picture in 2022, according to a report by the Nigerian Communications Commission (NCC).

The industry experienced a mixed performance in 2022, with a significant drop in foreign direct investment (FDI) balanced by an increase in domestic revenue and infrastructure deployment.

While mobile network operators (MNOs) enjoyed a significant increase in revenue, foreign direct investment (FDI) and domestic capital expenditure (CAPEX) witnessed a concerning decline. This trend raises questions about the long-term sustainability of the sector’s growth trajectory.

Despite grappling with rising operational costs, MNOs reported a healthy 20.01% increase in total revenue, reaching N3.3 trillion by year-end 2022. This growth suggests a robust and growing mobile subscriber base in Nigeria. However, this positive development is overshadowed by a significant drop in investments from both foreign and domestic sources.

The NCC’s 2022 Subscriber/Network Data Annual ReportFDI: Nigeria's Telecoms See Revenue Rise, Investment Fall by $353.1 Million in 2022 reveals a sharp decline in FDI, with capital inflow plummeting to USD 399.9 million in 2022, a steep decrease from USD 753 million recorded in 2021. This represents a worrying trend for the sector, which often relies on foreign investment for network expansion and technological advancements.

Domestic investment also took a hit, dropping by 36.1% to N785.7 billion in 2022. This decrease coincides with a rise in operational costs for telecom operators, which climbed to N1.99 trillion by year-end, according to the report. This suggests a challenging economic climate for investment in the telecoms sector.

However, a bright spot in the report is the substantial investment in infrastructure by telecom providers. In 2022, operators deployed a total of 34,862 new towers across the country, along with a significant increase in base stations, microwave coverage, and fiber optic deployment. This infrastructure expansion has the potential to improve network quality and capacity, ultimately benefiting mobile network users.

Despite these investment setbacks, the telecoms industry’s contribution to Nigeria’s GDP rose from 12.61% in Q4 2021 to 13.55% in Q4 2022. This indicates the industry’s continued importance to the national economy.

The report also revealed a shift in fixed network traffic patterns. The number of subscribers on slower internet speeds (below 10mbps) dropped, while the data for 4G fixed network subscriptions was not provided by service providers. This suggests a potential migration towards higher-speed internet options, highlighting a growing demand for improved data services.

MTN emerged as the leader in both outgoing and incoming fixed-to-mobile traffic, while 21st Century Network dominated incoming fixed traffic. This highlights the dominance of these players in the fixed network segment.

The NCC report paints a complex picture of Nigeria’s telecoms industry. While the mobile market thrives, a decline in investments raises concerns about the long-term sustainability of this growth. Addressing rising operational costs and attracting renewed investment will be crucial for the industry to maintain its momentum and deliver continued progress for Nigerians.

 

About Bukola Olanrewaju

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